9. Financial Laws - Part 1

Appreciating the Torah attitude toward wealth.

The biblical Jacob was an extremely wealthy man. Yet he jeopardized his life by crossing the Yabok River alone in order to retrieve some small utensils that he'd left behind.1 Why would someone so affluent be so concerned about petty possessions?

Further, there are numerous places in Jewish prayers (e.g. the blessing of the new month) that we ask God to provide us with material possessions and wealth. If Torah is a spirit guide, why are materialistic matters so important?

The answer to these questions is that material possessions are a means, not an end in itself.2 To facilitate our spiritual growth, God bestows upon us various resources like money, real estate, etc. If we appreciate that any material resource is meant to be used in the process of approaching God, then we will be careful to not waste our resources.

Effort vs. Predestined

Jewish philosophers are struck by a peculiar enigma. On one hand, God provides for the needs of all humanity. In fact, the Talmud teaches that a person's income for the entire year is determined on Rosh Hashana.3 In other words, we cannot increase our earnings and profits beyond the predestined decree.

On the other hand, the Torah exhorts us to pursue a reasonable livelihood by making whatever effort necessary, even though it is not our efforts that will provide the returns. So as hard as a person toils, he must firmly believe that it is God who is controlling his finances. Exercising this pursuit is a part of the spiritual growth process.4

Now we can understand why it is so futile to pursue any form of forbidden business activity. If all of one's income is provided by God, He certainly won't give you more if you cheat or take advantage of others. Even in a society where others may be applying unfair business practices, we must withstand the inclination to do likewise. When we live up to Jewish principles, we are certain to find favor in the eyes of God.5

Furthermore, according to the mystical sources, anyone who earns money through corrupt means will have to painfully reincarnate in some other form in order to return the misappropriated funds.6

Whose Money is it?

Just as material resources are part of our mission in the service of God, so too it is forbidden to desire someone else's possessions.7 Moreover, you may not pressure someone to sell you something that he owns,8 even if you are offering a high price. It is even prohibited to ponder how to acquire someone else's property through undue pressure.9

Peter was a collector of rare stamps. There was one very valuable stamp that he was trying to obtain for years. Finally, he heard of a private collector who owned that stamp. But the owner had no interest in selling the rare collectible. Peter is not allowed to make him "an offer he can't refuse." Peter is not even allowed to contemplate how to pressure him to sell it. Peter must learn how to be happy with the opportunities that comes his way.

Letter of the Law

Jewish financial laws differ significantly from that of secular law. Civil law is designed to protect people's rights and to keep others from infringing on those rights. But Jewish law, which teaches us how to engage in God-like behavior, contains an entirely different dimension.

Consequently, there are two levels of propriety in business matters. There is the strict "letter of the law" – i.e. that which can be enforced in a Jewish court of law. But there is another dimension called lifnim mishurat hadin (lit. beyond the letter of the law). This refers to situations where the basic law sways in your favor, but nevertheless the proper thing to do is to concede to the other party, i.e. to go beyond the letter of the law.10

Since all wealth comes from God, we have nothing to lose by being proper with others in financial matters, even if it is not something that technical Jewish law requires. In fact, the Talmud says that Jerusalem was destroyed in part because Jews were observing the technical laws, but not going beyond the letter of the law.11

Bear in mind that none of us wants God to judge us on a technical level. We hope that He will demonstrate mercy and give us leeway beyond the letter.12 It is a general principle that in the same manner you deal with others, God deals with you.12a So a good way to attain God's mercy is for us to go beyond the letter of the law when dealing with others.

NOTE: This class will present the general principles of Jewish financial laws, and not the plethora of details that exist in each case. Moreover, this guide discusses the technical obligation, and as we said, in many cases it is proper to go beyond the letter of the law. In real-life situations, it is important to consult with a rabbi for practical rulings.

Buying and Selling

It is forbidden to give a vendor the impression that you are interested in purchasing something if you have no interest in doing so.13 This would unfairly raise his hopes of making a sale. If you have no interest in buying, you can say, "I'm just looking today."

In making purchases, it is important to know at what point the product is considered the property of the buyer. Jewish law accepts any form of acquisition that is conventionally accepted in that locale as the finalization of a transaction. The most common form of acquisition is where the buyer lifts the item or moves it toward him. In some situations, for example on the diamond exchange, a handshake may be sufficient to complete an acquisition.14

If a person pays (either in part or in full) for a product, but has yet to make a formal acquisition, the item still belongs to the original owner. However, it is forbidden for either party to renege on the deal.15

If a verbal agreement is made to buy or sell something, although the sale does not take effect until an acquisition is made, nevertheless, the agreement should be upheld.16

Bob agrees to sell John his home for a set price, but they have not yet put anything in writing. Shortly thereafter, Bob gets offered more money from a different prospective buyer. The home still belongs to Bob, but Bob should keep his word and sell it to John at the agreed-upon price. 17

If a salesperson accidentally gives a customer insufficient change, it is the responsibility of the salesperson to contact the customer and correct the mistake.18

If a buyer discovers that the goods he purchased are defective, he has the right to demand a refund or a replacement.19 It does not matter whether the seller was aware of the fault.20 In Jewish law, this is true even if the item was used for years before discovering the imperfection. However, if the buyer continued to use the item after discovering the defect, he has forfeited his right to any claim.21

If there is any question whether the defect occurred before or after the buyer took possession, the burden of proof is on the customer.22

Of course, if the buyer knew at the time of purchase that the goods were defective, he may not return them.23 Moreover, if he did not examine the goods, but it was very easy for him to do so, he has forfeited his rights for return24 (unless he was specifically told that the items are not damaged).25

It is sometimes difficult to determine whether a slight imperfection is significant enough to consider the item "defective." For example, how would we regard a very minor scratch on a large piece of furniture? These types of issues are resolved based upon the standards of society. In other words, if the general public views this to be a defect, then the seller must exchange or refund the goods.26

What if a product is not defective, but is not the exact specifications the buyer understood he was buying? If the difference is significant, the sale is void.27 For example, someone who ordered for a certain size clothing and received a different size, may demand a refund or replacement.28

Competition and Advertising

The Torah advocates free trade. It is permitted to open a business that competes with an existing enterprise – providing that the new entrepreneur lives in the neighborhood of his business.29 In fact, it is even permitted to move to a new neighborhood in order to open up a shop where there is already an existing one.30

For over 25 years, Sam had a bait store near the bay. The fishermen liked his shop and he made a comfortable livelihood. One morning, he was shocked that next door to his local landmark, a new store had opened up called 'Baited Breath.' Astonished, he entered the new shop and discovered that they were selling all the same products at the same prices. If the owner of the new store lives in the neighborhood, Sam has no legal case against him.

If the owner of the new enterprise lives in a different area, the business may still be opened if it is ultimately providing a benefit for the local residents. For example, if the new store offers lower prices or better goods and services, it is permitted to open up in the location of an existing shop.31

Mrs. Robinson was furious. She shouted at Stanley, the owner of Peacock Dry Cleaners: "This is the second time you lost my garment, and the clothes I got back have more stains than when I gave them to you!" The store owner just shrugged. Everyone had complaints against his dry cleaners, but he was the only game in town.

One day, Stanley was surprised to find that a new dry cleaners had opened down the block. 'At Your Service Dry Cleaners' was owned by an out-of-town businessman who wanted to open a new branch. The service was far superior and the prices were more affordable. Peacock Dry Cleaners was forced out of business, with no claim against the new store.

Acceptable forms of business include:

Undercutting the competition32

Offering special gifts for new customers33

Carrying out an aggressive (positive) advertising campaign34

"Positive advertising" means that it is permitted to point out the advantages of your product, but not the negatives of your competitors – even if it is true.35

Some acceptable statements (if they are true) are:

"My materials are the best available."

"Our prices are cheaper than the other vendors."

Some statements are not allowed, even if they are true:

"They are using inferior materials."

"They are over-charging."36

Over-Pricing and Under-Pricing

If a buyer offers a price for an item that is significantly higher than the "going price," the seller must inform him that this is the case.37 If he is still willing to pay that price, the sale is permitted.

Similarly, if a seller offers an item for sale significantly below its value, the prospective buyer must be sure that the seller knows.38

Brian was looking to buy a used car. A classified ad in the local newspaper led him to the home of Sarah. Apparently, Sarah's husband had recently passed away and she wanted to get rid of the car since she didn't drive anyway. Brian was surprised that the price she was asking was significantly below the "going price." He must inform Sarah of this.39

Regarding price-gauging: It is forbidden to charge higher prices for goods or services simply because the buyer desperately needs them.40 In fact, such a transaction may be annulled post-facto even though it was agreed upon by both parties.41

Since honey is produced by bees, and bees are not a kosher species, how can honey be kosher?

The Aish Rabbi Replies:

The Talmud (Bechoros 7b) asks your very question! The Talmud bases this question on the principle that “whatever comes from a non-kosher species is non-kosher, and that which comes from something kosher is kosher.”

So why is bee-honey kosher? Because even though bees bring the nectar into their bodies, the resultant honey is not a 'product' of their bodies. It is stored and broken down in their bodies, but not produced there. (see Shulchan Aruch Y.D. 81:8)

By the way, the Torah (in several places such as Exodus 13:5) praises the Land of Israel as "flowing with milk and honey." But it may surprise you to know that the honey mentioned in the verse is actually referring to date and fig honey (see Rashi there)!

In 1809, a group of 70 disciples of the great Lithuanian sage the Vilna Gaon, arrived in Israel, after traveling via Turkey by horse and wagon. The Vilna Gaon set out for the Holy Land in 1783, but for unknown reasons did not attain his goal. However he inspired his disciples to make the move, and they became pioneers of modern settlement in Israel. (A large contingent of chassidic Jews arrived in Tzfat around the same time.) The leader of the 1809 group, Rabbi Israel of Shklov, settled in Tzfat, and six years later moved to Jerusalem where he founded the modern Ashkenazic community. The early years were fraught with Arab attacks, earthquakes, and a cholera epidemic. Rabbi Israel authored, Pe'at Hashulchan, a digest of the Jewish agricultural laws relating to the Land of Israel. (He had to rewrite the book after the first manuscript was destroyed in a fire.) The location of his grave remained unknown until it was discovered in Tiberias, 125 years after his death. Today, the descendants of that original group are amongst the most prominent families in Jerusalem.

When you experience joy, you feel good because your magnificent brain produces hormones called endorphins. These self-produced chemicals give you happy and joyful feelings.

Research on these biochemicals has proven that the brain-produced hormones enter your blood stream even if you just act joyful, not only when you really are happy. Although the joyful experience is totally imaginary and you know that it didn’t actually happen, when you speak and act as if that imaginary experience did happen, you get a dose of endorphins.

These chemicals are naturally produced by your brain. They are totally free and entirely healthy.

Many people find that this knowledge inspires them to create more joyful moments. It’s not just an abstract idea, but a physical reality.

Occasionally, when I walk into an office, the receptionist greets me rudely. Granted, I came to see someone else, and a receptionist's disposition is immaterial to me. Yet, an unpleasant reception may cast a pall.

A smile costs nothing. Greeting someone with a smile even when one does not feel like smiling is not duplicity. It is simply providing a pleasant atmosphere, such as we might do with flowers or attractive pictures.

As a rule, "How are you?" is not a question to which we expect an answer. However, when someone with whom I have some kind of relationship poses this question, I may respond, "Not all that great. Would you like to listen?" We may then spend a few minutes, in which I unburden myself and invariably begin to feel better. This favor is usually reciprocated, and we are both thus beneficiaries of free psychotherapy.

This, too, complies with the Talmudic requirement to greet a person in a pleasant manner. An exchange of feelings that can alleviate someone's emotional stress is even more pleasant than an exchange of smiles.

It takes so little effort to be a real mentsch.

Today I shall...

try to greet everyone in a pleasant manner, and where appropriate offer a listening ear.

With stories and insights,
Rabbi Twerski's new book Twerski on Machzor makes Rosh Hashanah prayers more meaningful. Click here to order...